Source · Select Committees · Public Accounts Committee
Recommendation 18
18
Accepted
Department remains complacent about significant financial risks of bus franchising for local authorities.
Recommendation
We were concerned the Department was being complacent about the significant level of financial risk for individual local transport authorities if they opt for franchising. The Department told us that some of the transition costs in Greater Manchester would have been spent anyway to keep supported services running. But the Department also acknowledged there are financial risks and that mayoral combined authorities are likely to be better equipped to undertake franchising.40 The Department also agreed that full franchising would not work for many local areas. It is piloting different franchising models with varying levels of cost, skills requirements 38 C&AG’s report, paras 3.3-3.4, Figure 11 39 Transport for Greater Manchester (LBS0021) 40 Qq 58, 61-62 13 and financial risks, depending on which assets are acquired by the local transport authority. Other models include joint ventures with operators or franchising just one region of a bus network.41
Government Response Summary
The government agreed to support local transport authorities in understanding the benefits and risks of different models for running bus services and optimize how they work, including learning from the pilots of franchising models, providing guidance based on its review of enhanced partnerships, and promoting effective low-cost and no-cost approaches by Summer 2026.
Government Response
Accepted
HM Government
Accepted
4. PAC conclusion: The department has not yet provided local transport authorities with the information they need to understand the relative merits of different bus operating models, including franchising. 4. PAC recommendation: The department should support local transport authorities to understand the benefits and risks of different models for running bus services and optimise how they work, including learning from the pilots of franchising models, providing guidance based on its review of enhanced partnerships, and promoting effective low-cost and no-cost approaches. 4.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2026 5 4.2 The department is committed to supporting local transport authorities to deliver better bus services and share learnings, including through the Bus Centre of Excellence. It is also supporting and working with industry partners to provide shared guidance and advice, such as a handbook and toolkit for local transport authorities on the different regulatory models for running bus services, published by the Confederation of Passenger Transport in November 2025, with the support of the department and key local authority organizations. This provides: • an overview of the bus service regulatory models available for local authorities to choose from; • an 8-step framework for systematically working through the options and making a decision informed by evidence, expertise and stakeholder views; • supporting evidence and illustrations of relevant factors to consider; and • a multi-criteria decision analysis tool to score objectively various alternative ways of regulating bus services. 4.3 The department commenced the franchising pilots programme earlier last year, with York and North Yorkshire and Cheshire West and Chester announced as participants in June 2025, and Hertfordshire, Cornwall and Cumbria announced in October 2025. The pilots aim to support local transport authorities in understanding which model of franchising is most appropriate for them, and particularly to consider what might work in rural areas. 4.4 The department is also working to provide active support and funding to local transport authorities that wish to explore franchising. This funding will support implementation of measures in the Bus Services Act 2025 and help local authorities deliver franchising in a way that is tailored to local needs, if they choose to. 4.5 The department will also provide support to local transport authorities that choose to deliver their bus services through an Enhanced Partnership (EP). Drawing on findings from the 2025 review of EPs, the department plans to publish updated guidance that sets out statutory requirements and processes, alongside actionable steps for designing, implementing, and improving EPs. The department intends to publish an EP Manual, which will provide advice on making improvements using low and no cost approaches and on the new requirements for provision of socially necessary local services and new minimum standards. It will also highlight existing best practices through case studies, examples and templates.